From a biophysical point of view, a “closed loop” is an impossibility. In this chapter, we begin by discussing what it at all may mean that the economy goes in circles, or indeed that anything goes in circles. The foundational issue at the bottom of the discussion is the relationship between model and reality, and in the case of a “circular” model, which properties of the geometric object known as the circle are included in that model. If “circular” merely means that there is something somewhere that travels in a loop, the economy may well be circular. If that loop is supposed to be a closed loop of biophysical flows, the problems begin.

For bioeconomists, who focus on biophysical flows, it is difficult to make sense of the vision of the circular economy. Here is why: Most basic materials for human consumption, such as food and freshwater, have to be taken from the environment and once used cannot be recycled by processes under human control. The reason is that materials and products for consumption have to be pure or ordered enough to be safe and useful. Economic activities are entropic (disordering) processes that only can run at the expense of gradients provided by nature (resources and environmental services). Indeed, since the industrial revolution, socio-economic systems have been optimised towards increasingly linear models of production and consumption because this has allowed to accelerate the rate of economic activities. This change was possible because of fossil energy. Linear economies grow faster and are more competitive. In fact, within the EU, agriculture, mining and industry are increasingly outsourced to other countries, and the fossil energy used in EU is almost totally imported. Increase in productivity in Europe depends on linear economies outside Europe and on the capacity and opportunity of Europeans to import them.

In conclusion, the ideal of a circular economy is known to be incompatible with a developed, affluent economy in growth. Overall circularisation implies de-growth, or a slowdown of economic growth. As a consequence, the current level of recycling is very low.